Legal Question in Bankruptcy in Wisconsin

Creditors' Corporate Bankruptcy--Effect on Collectability of What is Owed

Theoretically, the bankruptcy of a creditor has no legal effect upon the collectability of a debt owed to them. The ownership of such a debt simply switches to the bankruptcy trustee rather than the company or its owners. What often occurs is that the trustee in the scenario will sell the accounts receivable of the bankrupt creditor to other companies who are in the business of collecting debt or investing in the right to collect debt. Such rights can be bought and sold on the open market, so you could end up seeing multiple successive owners of the debt which can sometimes confuse the issue of who you should pay. Sale and resale of the right to collect debts is a common practice regardless of whether or not the original creditor has gone bankrupt. You should therefore consult with a lawyer and have him research these issues if you are unsure who to pay or what to do. One additional bit of good news that a bankruptcy lawyer would probably give you is that you can probably discharge such debt in your own personal bankruptcy, regardless of who owns the right to collect it at the time you file. Good luck!